On January 1, 2017, Spring Fashions Inc. enters into a contract with a southeast retail company to provide 500 dresses for $ 62,500 ($ 125 per dress) over the next 10 months. On October 1, 2017, after 450 of the dresses had been delivered ( 50 dresses per month), the contract is modified.
Required:
1. Fifty dresses were delivered each month for the first 9 months of 2017. Prepare Spring Fashions’s monthly journal entry to record revenue.
2. Assume that the contract is modified to sell, once the original 500 dresses are delivered, an additional 100 dresses at $ 110 per dress, which is the stand alone selling price on October 1, 2017. Assume the dresses are delivered evenly in November and December 2017. Prepare the journal entries to record the contract modification.